TNZ braves the demerger with strong profits

The freshly de-merged Telecom New Zealand has posted a net profit of $NZ1 billion after what the CEO described as the “most complex corporate transaction in recent New Zealand history.”

Adjusted profits rose 52 per cent to $NZ240 million with earnings from continuing operations coming in at $NZ129 million. The carrier demerged its infrastructure unit in November 2011, impacting the results.

"Due to the demerger timing and the associated accounting impact, year-on-year financial comparisons are a complication," said Telecom NZ CEO Paul Reynolds. “The demerger was probably the most and a world’s first for a telecommunications company. I am pleased it has helped deliver real value for customers and shareholders.”

He added that the simplification of the business had delivered both improvement to customer satisfaction and reduction in costs.

“Customer satisfaction has improved in New Zealand, and the focus on simplicity and efficiency means that costs have declined faster than revenues, enabling Telecom to maintain flat EBITDA for its continuing operations,” he said.

But one customer, Stephen Fry, who is in New Zealand working on the Hobbit took to the Twiitersphere this week to vent his anger with the carrier. Fry tweeted that New Zealand's broadband is probably the worst he'd encountered. A spokeswoman for Telecom said that the problem had been a 'misunderstanding' and that Fry had blown the data cap on the residential broadband plan at the house where he is staying and his service was throttled.

“Telecom has since spoken to the broadband customer and they have now been put on a plan better suited to their needs,” the carrier said. Fry later tweeted that Telecom had been 'quick and polite' in fixing his problem adding “I wonder if everyone who complains gets this attention.”

Telecom NZ broadband revenues were up 5% during the half, through a combination of a 7,000 increase in connections during the half and a 2 percent increase in ARPU (average revenue per user). ®